Page 25 - CityofSouthlakeFY27Budget

TABLE OF CONTENTS

PRINCIPLES IN PRACTICE

EVERY FINANCIAL GUIDING PRINCIPLE, DELIVERED IN THE FY 2027 BUDGET.

Guiding principle In the FY 2027 budget Result

Structural balance Recurring revenue funds Balanced budget Budget Overview
recurring costs
Optimum reserves Reserves held within Above target
Council policy
Managed growth Optimization holds 2% vs 2.5% CPI
growth near inflation
Strategic debt Rapid payoff, low leverage *Retired within 10 years

Cash-funded capital Pay-as-you-go for major Funded largely with
projects cash
Employer of choice Market-leadership pay 85th / 70th percentile
fully funded
Service levels No reduction in services Fully protected

Forward-looking Policies evolve for the New funds and
stewardship future guidelines

THE RESULT
AAA bond rating · GFOA Triple Crown · Clean independent audits
· 96% of residents affirm high value for taxes

Guiding principles can be found in the appendix * Property tax supported debt

GOAL: TAX RATE MANAGEMENT AND TAX RELIEF

Tax rate management and tax relief have been a guiding financial management principle that Southlake
has strategically implemented over time, beginning in 2009 with the adoption of a homestead
exemption. Since that time, Southlake has implemented additional tax relief, first reducing the max in
the form of the homestead exemption allowed, and then beginning in 2019 with tax rate reductions.
New development and strong sales tax revenues combined with expenditure management have made
it possible to implement fifteen relief initiatives since 2009.

State law requires a taxing unit to calculate two rates after receiving its certified appraisal roll: the
no-new-revenue tax rate and the voter approval tax rate. The no-new-revenue rate is the rate that will
generate the same amount of property tax dollars as the previous year, excluding new construction and
annexations, when the two years are compared.

If a city adopts a tax rate exceeding the no-new-revenue rate, the city must call and hold a public
hearing to discuss that action. Additionally, if a city adopts a tax rate exceeding the voter approval rate
(3.5% M&O growth, plus “unused increment rate”), the city must hold an automatic election. Depending
on the ultimate rate that is chosen by the City and its relationship to these legally defined rates, there are
requirements that must be followed to comply with truth-in-taxation laws. These requirements protect

FY 2027 City of Southlake | Budget Book 25